US GDP DOWN

Real gross domestic product -- the value of the production of goods and services in the United States, adjusted for price changes -- decreased at an annual rate of 0.2 percent in the first quarter of 2015, according to the "third" estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 2.2 percent.

The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, the decrease in real GDP was 0.7 percent. With the third estimate for the first quarter, exports decreased less than previously estimated, and personal consumption expenditures (PCE) and imports increased more.

The decrease in real GDP in the first quarter primarily reflected negative contributions from exports, nonresidential fixed investment, and state and local government spending that were partly offset by positive contributions from PCE, private inventory investment, and residential fixed investment. 

Imports, which are a subtraction in the calculation of GDP, increased.

Real GDP decreased 0.2 percent in the first quarter of 2015, in contrast to an increase of 2.2 percent in the fourth quarter of 2014. The downturn in the percent change in real GDP reflected a deceleration in PCE and downturns in exports, in nonresidential fixed investment, and in state and local government spending that were partly offset by upturns in private inventory investment and in federal government spending and a deceleration in imports. 

The price index for gross domestic purchases, which measures prices paid by U.S. residents, decreased 1.6 percent in the first quarter, the same decrease as in the second estimate; this index decreased 0.1 percent in the fourth quarter. Excluding food and energy prices, the price index for gross domestic purchases increased 0.1 percent, compared with an increase of 0.7 percent.

Real personal consumption expenditures increased 2.1 percent in the first quarter, compared with an increase of 4.4 percent in the fourth. Durable goods increased 1.3 percent, compared with an increase of 6.2 percent. Nondurable goods increased 0.8 percent, compared with an increase of 4.1 percent. 

Services increased 2.7 percent, compared with an increase of 4.3 percent.

Real nonresidential fixed investment decreased 2.0 percent in the first quarter, in contrast to an increase of 4.7 percent in the fourth. Investment in nonresidential structures decreased 18.8 percent, in contrast to an increase of 5.9 percent. Investment in equipment increased 2.6 percent, compared with an increase of 0.6 percent. Investment in intellectual property products increased 4.9 percent, compared with an increase of 10.3 percent. Real residential fixed investment increased 6.5 percent, compared with an increase of 3.8 percent. 

Real exports of goods and services decreased 5.9 percent in the first quarter, in contrast to an increase of 4.5 percent in the fourth. Real imports of goods and services increased 7.1 percent, compared with an increase of 10.4 percent. 

Real federal government consumption expenditures and gross investment was unchanged in the first quarter, in contrast to a decrease of 7.3 percent in the fourth. National defense decreased 1.2 percent, compared with a decrease of 12.2 percent. Nondefense increased 2.0 percent, compared with an increase of 1.5 percent. Real state and local government consumption expenditures and gross investment decreased 1.0 percent, in contrast to an increase of 1.6 percent. 

The change in real private inventories added 0.45 percentage point to the first-quarter change in real GDP after subtracting 0.10 percentage point from the fourth-quarter change. Private businesses increased inventories $99.5 billion in the first quarter, following increases of $80.0 billion in the fourth quarter and $82.2 billion in the third. 

Real final sales of domestic product -- GDP less change in private inventories -- decreased 0.6 percent in the first quarter, in contrast to an increase of 2.3 percent in the fourth. 

Gross domestic purchases 

Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever produced -- increased 1.7 percent in the first quarter, compared with an increase of 3.2 percent in the fourth. 

Gross national product

Real gross national product -- the goods and services produced by the labor and property supplied by U.S. residents -- decreased 1.0 percent in the first quarter, in contrast to an increase of 1.4 percent in the fourth. GNP includes, and GDP excludes, net receipts of income from the rest of the world, which decreased $30.5 billion in the first quarter, compared with a decrease of $30.7 billion in the fourth; in the first quarter, receipts decreased $30.8 billion, and payments decreased $0.3 billion. 

Current-dollar GDP

Current-dollar GDP -- the market value of the production of goods and services in the United States -- decreased 0.2 percent, or $10.4 billion, in the first quarter to a level of $17,693.3 billion. In the fourth quarter, current-dollar GDP increased 2.4 percent, or $103.9 billion.

Gross domestic income 

Real gross domestic income (GDI), which measures the value of the production of goods and services in the United States as the costs incurred and the incomes earned in production, increased 1.9 percent in the first quarter, compared with an increase of 3.7 percent in the fourth. For a given quarter, the estimates of GDP and GDI may differ for a variety of reasons, including the incorporation of largely independent source data. However, over longer time spans, the estimates of GDP and GDI tend to follow similar patterns of change. 

Revisions 

The "third" estimate of the first-quarter percent change in GDP is 0.5 percentage point, or $23.6 billion, more than the second estimate issued last month, primarily reflecting upward revisions to exports, to personal consumption expenditures, to private inventory investment, to nonresidential fixed investment, and to state and local government spending that were partly offset by an upward revision to imports. 

Advance Estimate Second Estimate Third Estimate

(Percent change from preceding quarter)

Real GDP............................... 0.2 -0.7 -0.2

Current-dollar GDP..................... 0.1 -0.9 -0.2

Real GDI............................... ... 1.4 1.9

Gross domestic purchases price index... -1.5 -1.6 -1.6 

Corporate Profits

Profits from current production

Profits from current production (corporate profits with inventory valuation adjustment (IVA) and capital consumption adjustment (CCAdj)) decreased $110.8 billion in the first quarter, compared with a decrease of $30.4 billion in the fourth.

Profits of domestic financial corporations decreased $2.1 billion in the first quarter, compared with a decrease of $12.5 billion in the fourth. Profits of domestic nonfinancial corporations decreased $79.6 billion, in contrast to an increase of $18.1 billion. The rest-of-the-world component of profits decreased $29.0 billion, compared with a decrease of $36.1 billion. This measure is calculated as the difference between receipts from the rest of the world and payments to the rest of the world. In the first quarter, receipts decreased $40.0 billion, and payments decreased $11.0 billion. 

Taxes on corporate income increased $25.3 billion in the first quarter, in contrast to a decrease of $4.8 billion in the fourth. Profits after tax with IVA and CCAdj decreased $136.1 billion, compared with a decrease of $25.8 billion. The first-quarter changes in taxes on corporate income mainly reflect the expiration of bonus depreciation provisions. For further explanation, see the box below. 

Dividends increased $5.8 billion in the first quarter, compared with an increase of $18.6 billion in the fourth. Undistributed profits decreased $141.8 billion, compared with a decrease of $44.3 billion. 

Net cash flow with IVA -- the internal funds available to corporations for investment -- decreased $135.7 billion, in contrast to an increase of $12.2 billion. 

bea.gov